PARENTS are being advised they could make significant savings by signing up for the Government's Tax-Free Childcare scheme.

New statistics from HM Revenue and Customs (HMRC) have revealed that 65,620 families in the North West received up to £2,000 towards the cost of their childcare during the 2021 to 2022 tax year.

That was up from 47,750 in the previous year.

Tax-Free Childcare provides thousands of eligible working families with financial support towards the cost of their childcare with the government paying £240 million annually in top-up payments to families using the scheme.

For families who use Tax-Free Childcare, the money they save each month on their childcare costs is money that goes back into their pockets.

So how does it work?

For every £8 paid into a Tax-Free Childcare online account, families will automatically receive an additional £2 in government top-up, and it is available for children aged up to 11, or 17 if the child has a disability.

Families receive up to £500 every three months, per child, or £1,000 if their child is disabled, helping towards the cost of before and after-school clubs, childminders and nurseries, holiday clubs and other approved childcare schemes.

Thousands could be missing out

But hundreds of thousands of families could be missing out, with recent research published by HMRC estimating that about 1.3 million families could be eligible for this government support.

Parents and carers are being urged to check their eligibility and register for Tax-Free Childcare via GOV.UK.

Myrtle Lloyd, HMRC’s director general for customer services, said: “Tax-Free Childcare can make a big difference to families, helping with the bills for things like nurseries, childminders and after school clubs. It’s easy to register – search ‘Tax-Free Childcare’ on GOV.UK.”

The latest monthly comparisons for the North West also show that a record number of families were using their Tax-Free Childcare account in March 2022 – 50,095 families compared to 36,795 in March 2021 – an increase of 13,300 families.

The scheme offers a 20 per cent government funded top-up on money deposited into Tax-Free Childcare accounts, which can be used to pay their childcare provider.

Accounts can be opened at any time of the year and can be used straight away, and money can be deposited at any time and used when needed.

For example, if parents and carers have school-aged children and use holiday clubs during school holidays, they could deposit money into their accounts throughout the year.

This means they could spread the cost of childcare while also benefiting from the 20  per cent government top-up. Any unused money that is deposited can be simply withdrawn at any time.

Tax-Free Childcare is also available for pre-school aged children attending nurseries, childminders, or other childcare providers.

Families with younger children will often have higher childcare costs than families with older children, so the tax-free savings can really make a difference.

Childcare providers can also sign up for a childcare provider account via GOV.UK to receive payments from parents and carers via the scheme.